In the 2017/18 Half-year Economic and Fiscal Update report, he said the Cook Islands had experienced strong economic growth in recent years.
The 2017/18 budget aimed to improve real wages in the Cook Islands and to cover capital works that supported both local development and the tourism industry, he added.
Brown said economic growth in recent years had largely been driven by increases in tourism arrivals.
“While the growth has resulted in an increase in the standard of living for Cook Islanders, and increases in government revenue, the government is committed to in-creasing the diversification of the economy, such as through the Manatua Submarine Cable, to ensure the sustainability of growth over the long-term,” he said. Recent economic growth has also provided the government with a fiscal environment of strong revenues, which has provided capacity to take on capital and operating expenses that had previously been left wanting, Brown said.
Despite this, he said the government acknowledges the need to find a balance between these spending priorities and strong fiscal management.
“The government is committed to responsible fiscal management, and is anticipating a smooth pathway back to budget balance with the aim of achieving fiscal balances by 2020/21, while recognising the need for economic development.
“To ensure that this goal is achieved, the government will focus on maximising outcomes within current expenditure baselines in the 2018/19 Budget prior to consid-ering the appropriation of additional funds.”
Brown said the fiscal balance is subsequently expected to improve from a deficit of $40.4 million (-9.3 per cent of GDP) in 2017/18 to positive fiscal balances by 2020/21.
“The path outlined for achieving budget balance will also assist the government in meeting its fiscal responsibility ratios for cash reserves over the medium-term, while ensuring that net debt ratios continue to be adhered to.
“The government is committed to fair, reasonable and efficient spending targeted at key priority areas as outlined in the Budget Policy Statement.”